Asciano sees first half profits steady in soft conditions

By: Rob McKay

Patrick sale talks continue with speculation alighting on Maersk as a possible suitor

Asciano sees first half profits steady in soft conditions
Asciano is open to offers for its Patrick subsidiary.


Asciano has battled subdued economic condition to record a slight increase in first half net profits compared with the previous first half.

Net profit after tax (NPAT) was $189.7 million, up 1.2 per cent despite a fall in revenues of 2.1 per cent to $1.857 billion.

"It was a strong half year result given the continuing tough operating environment," CEO and managing director John Mullen says.

The group took a number of port-related hits which were made up through cost-control efforts, coal and container terminal boosts and rail synergies from the merger of two divisions.

However, Mullen was generally happy with the stevedoring sector’s performance.

"The redevelopment and automation of Port Botany will deliver material improvements in safety, economic and customer service outcomes, as evidenced by the measurably superior metrics achieved at our Brisbane terminal," he says.

"The redevelopment will place the terminals business in a strong competitive position, enabling it to offer shipping lines servicing the Australian market a superior nationwide service, while also delivering the business the platform to grow and improve performance and returns over the terminal’s lifecycle."

Despite that, moves to divest the group of all or part of the Patrick steverdoring arm continue as rumour continues around the identity of the buyer.

China Merchants was said to be an early contender for Patrick but talk amongst sector observers is that a suitable price was elusive.

Attention has now moved to the Maersk Group that controls the world’s biggest container shipping operation, Maersk Line, and its ports subsidiary, APM Terminals, possibly with the pair working in tandem domestically.

All that Asciano will say is contained in Mullen’s statement that the group "continues to be in discussions with third parties regarding the strategic opportunities across the Patrick businesses. These discussions are incomplete, but should they result in a definitive outcome we will advise the market at that time."

A response from Maersk has been sought.

The bulk and automotive port services arm felt the most pain, with earnings before interest and tax down 55.3 per cent from $65.1million to $29.1 million.

This was put down to softer volumes across stevedoring sites including the impact of the ongoing wind down of the Agility contract servicing the Gorgon project in Western Australia and lower storage volumes in the Autocare business, and soft demand for timber, amongst other issues.

It was also burdened with a one-off $18.5 million settlement with the Port of Melbourne associated with the redevelopment of Webb Dock.

"An after tax material cost of $11.4m was reported primarily associated with the business disruption caused by the redevelopment of the Port Botany container terminal," Mullen states.

"In light of the sustained slow down in activity levels at bulk ports around Australia and New Zealand we have also moved to further restructure the Bulk & Auto Port Services Division incurring redundancy costs of $2.5m pre tax."

Meanwhile, chairman Malcolm Broomhead will retire from the company’s board at the company’s annual general meeting later this year.

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